BITCOIN

Malthusian

zagfles said:

 

OK I'm sure you're taking the p, but just in case not, or anyone else reading doesn't understand basic market fundamentals...

They're not taking the p. Check their comment history. To truly understand the future of finance it helps to understand the mindset of the "early adopters".

Scottex99

These aren't basic markets. There is a halvening every few years

Doesn't guarantee anything except the block reward is cut in half and therefore supply into the market is reduced. All the previous 4 year cycles have followed a similar pattern and I think this will be the same but nobody can be sure 100%

Aegis

Scottex99 said:

How is that different to gold or stocks, aside from dividends and “gold can be used to make watches”

I don’t think it’s zero sum at all. 

I’ve bought at every possible price between $3k and $60k.

I bought at ~$17k in Jan this year when whoever was on the other side was happy to sell to me.

And I’ll sell sometime next year, hopefully in the $60-80k range. When someone will happily buy too.

its a free market, nobody that got in super early needs to convince people to push the price up, the market, hard money and economics does that job well enough 

If that was a serious question, you really aren't an informed investor.  Stocks are fractional ownerships of companies, which means that in the event that the shares are wound up, the shareholders are entitled to a proportion of the company's underlying assets.  At the same time, the ownership also gives access to a proportion of the profit that the company makes, whether distributed as a dividend or reinvested into the company for future growth. Doesn't matter which of those happens, the idea is the same: the company's activity brings in funds from external sources in exchange for the goods or services that the company provides.  As such, if the company has a good business model or good potential, that's the reason to expect the value of the company to go up.

That's not even remotely comparable to what happens with commodities like gold.  In the case of gold, someone buys it and it does nothing.  The hope is that the scarcity coupled with the utility (it's pretty and it's also a very good conductor) means that someone will eventually want to pay more for your gold than you bought it for.

With bitcoin, you have a system set up like commodities, but missing the utility. On its own, scarcity really doesn't matter, and eventually people will realise that. Based on what I am seeing in terms of the number of people who are getting more aware of what crypto is and how many scams there are in the sector, I'd be really surprised if you achieved $60-80k next year.  But hey, it's all based on completely irrational sentiment, so who knows?

Aegis

boingy said:

Comparing Bitcoin with shares is not a sensible approach.
You should compare Bitcoin with other, more traditional, currencies. People invest in Dollars, Pounds and Euros. Just like Bitcoin, none of those things are real.

Anyhow, I'm just glad to get my Bitcoin money back. Too volatile for my liking.

I don't know why crypto triggers such strong responses in people. 

I would agree, it's definitely not even remotely similar. Much better to make a comparison with commodities, but there are still quite a lot of differences, in that when you buy a commodity you have a right to an actual physical asset.  The best analogy I have come up with is to a commodity future contract dated so far into the future that you will never have ownership of the actual asset. 

Scottex99

Aegis said:

Scottex99 said:

How is that different to gold or stocks, aside from dividends and “gold can be used to make watches”

I don’t think it’s zero sum at all. 

I’ve bought at every possible price between $3k and $60k.

I bought at ~$17k in Jan this year when whoever was on the other side was happy to sell to me.

And I’ll sell sometime next year, hopefully in the $60-80k range. When someone will happily buy too.

its a free market, nobody that got in super early needs to convince people to push the price up, the market, hard money and economics does that job well enough 

If that was a serious question, you really aren't an informed investor.  Stocks are fractional ownerships of companies, which means that in the event that the shares are wound up, the shareholders are entitled to a proportion of the company's underlying assets.  At the same time, the ownership also gives access to a proportion of the profit that the company makes, whether distributed as a dividend or reinvested into the company for future growth. Doesn't matter which of those happens, the idea is the same: the company's activity brings in funds from external sources in exchange for the goods or services that the company provides.  As such, if the company has a good business model or good potential, that's the reason to expect the value of the company to go up.

That's not even remotely comparable to what happens with commodities like gold.  In the case of gold, someone buys it and it does nothing.  The hope is that the scarcity coupled with the utility (it's pretty and it's also a very good conductor) means that someone will eventually want to pay more for your gold than you bought it for.

With bitcoin, you have a system set up like commodities, but missing the utility. On its own, scarcity really doesn't matter, and eventually people will realise that. Based on what I am seeing in terms of the number of people who are getting more aware of what crypto is and how many scams there are in the sector, I'd be really surprised if you achieved $60-80k next year.  But hey, it's all based on completely irrational sentiment, so who knows?

You're right, the majority of my experience is with crypto and not with S&S, although I'm still old enough to have some Funds on HL etc.

But that doesn't make it zero-sum, except that the potential utility is more conceptual and is going to be for a while when the whole asset class is barely 15 years old.

Scarcity will matter if central banks keep printing billions in a never ending cycle of debt and inflation. 

And scams I would say are irrelevant, like there isn't scams in banking or even in huge global companies. Enron etc. Scams are prevalent because it's new and people are fairly clueless. I opened my junk mail personal email yesterday and had multiple Nigerian Prince, Lottery wins etc. Nobody would fall for that these days but they might just fall for some investment scam promising 2% return a week for "Forex Bitcoin Super Algo Trading" because people might think hmmm BTC did go from $1 to $50k.....

Aegis

Scottex99 said:

Aegis said:

Scottex99 said:

How is that different to gold or stocks, aside from dividends and “gold can be used to make watches”

I don’t think it’s zero sum at all. 

I’ve bought at every possible price between $3k and $60k.

I bought at ~$17k in Jan this year when whoever was on the other side was happy to sell to me.

And I’ll sell sometime next year, hopefully in the $60-80k range. When someone will happily buy too.

its a free market, nobody that got in super early needs to convince people to push the price up, the market, hard money and economics does that job well enough 

If that was a serious question, you really aren't an informed investor.  Stocks are fractional ownerships of companies, which means that in the event that the shares are wound up, the shareholders are entitled to a proportion of the company's underlying assets.  At the same time, the ownership also gives access to a proportion of the profit that the company makes, whether distributed as a dividend or reinvested into the company for future growth. Doesn't matter which of those happens, the idea is the same: the company's activity brings in funds from external sources in exchange for the goods or services that the company provides.  As such, if the company has a good business model or good potential, that's the reason to expect the value of the company to go up.

That's not even remotely comparable to what happens with commodities like gold.  In the case of gold, someone buys it and it does nothing.  The hope is that the scarcity coupled with the utility (it's pretty and it's also a very good conductor) means that someone will eventually want to pay more for your gold than you bought it for.

With bitcoin, you have a system set up like commodities, but missing the utility. On its own, scarcity really doesn't matter, and eventually people will realise that. Based on what I am seeing in terms of the number of people who are getting more aware of what crypto is and how many scams there are in the sector, I'd be really surprised if you achieved $60-80k next year.  But hey, it's all based on completely irrational sentiment, so who knows?

You're right, the majority of my experience is with crypto and not with S&S, although I'm still old enough to have some Funds on HL etc.

But that doesn't make it zero-sum, except that the potential utility is more conceptual and is going to be for a while when the whole asset class is barely 15 years old.

Scarcity will matter if central banks keep printing billions in a never ending cycle of debt and inflation. 

And scams I would say are irrelevant, like there isn't scams in banking or even in huge global companies. Enron etc. Scams are prevalent because it's new and people are fairly clueless. I opened my junk mail personal email yesterday and had multiple Nigerian Prince, Lottery wins etc. Nobody would fall for that these days but they might just fall for some investment scam promising 2% return a week for "Forex Bitcoin Super Algo Trading" because people might think hmmm BTC did go from $1 to $50k.....

Unless you can identify how it is positive sum, it's zero sum. That's just how maths works - essentially it's stating that the only money coming into the system is what people pay in to buy the assets. In terms of utility, the idea of saying "well, it might do something useful in future" just means that it isn't doing anything now, therefore it has no utility now. Even with the best will in the world, there's no way to imagine that a bitcoin will actually be useful for something in future because the functionality would need to be there now.

As such, that leaves wishful thinking and the scams, and explaining why the scams are prevalent doesn't make them go away or give any additional protection.  As a comparison, I had an ISA with Kaupthing Edge back in 2008.  Kaupthing went bust and took my money with it.  I was protected by the Financial Services Compensation Scheme in full because it was a recognised bank and I had no reasonable way of predicting in advance that the bank itself would go bust.  The recognition here was that banks and investment platforms are an integral foundation of a functioning financial services industry, and it is really telling that the same protection has not been extended to crypto exchanges.

Honestly, keep trading bitcoin if it makes you happy, just stay very aware of the fact that by any long-term definition, it's not an investment.

Malthusian

Scottex99 said:

Scarcity will matter if central banks keep printing billions in a never ending cycle of debt and inflation. 

No it won't. The Bank of England and the Fed could turn on the printing press and double the amount of dollars and pounds in existence overnight, which ceteris paribus would cause the price of Bitcoin in dirty fiat to jump to $80,000 / £80,000 or whatever. After you offramped your Bitcoin into dirty fiat, you would have twice as much fiat as before but it would buy half as much actual stuff, leaving you in the same position (not rich).

Central bank money printing isn't enough to make hodlers rich. People have to be willing to hand over increasing amounts of actual goods and services in exchange for Bitcoin. Which means they have to want to buy Bitcoins specifically in larger numbers, in order to make early adopters rich. And not, say, property, or company shares, or þe olde golde bullion, or literally anything else that can hold its value when cash is depreciated and that people have historically tended to buy when they wanted to preserve the value of their savings. 

How long can Bitcoin bimble along, still miles off the price the largest cohort bought at, becoming increasingly associated with scams and ransomware, without losing its status as the safe haven to which people will one day flee?

(We'll leave aside the whole question of why it is bad for central banks to create pounds and dollars to maintain the money supply but OK for Tether to create stabledollars out of thin air to buy Bitcoins with.)

Cus

Scottex99 said:

boingy said:

Comparing Bitcoin with shares is not a sensible approach.
You should compare Bitcoin with other, more traditional, currencies. People invest in Dollars, Pounds and Euros. Just like Bitcoin, none of those things are real.

Anyhow, I'm just glad to get my Bitcoin money back. Too volatile for my liking.

I don't know why crypto triggers such strong responses in people. 

Good for you, everyone is here to try to make money from their investments.

It creates such strong responses because it’s nascent, the White Paper for Bitcoin is 15 years old.

Typically older people don’t trust it as they can’t understand it and younger people see it as a type of digital gold: store of value, democratised hardest form of money that cannot be inflated away like fiat money can (and has).

We all know big bankers can’t be trusted to look after the average person, the same as the majority of politicians. Jamie Dimon just came out this week saying he hates Bitcoin and no doubt gave some Terrorist Financing, Money Laundering reason for it, ironic given what his bank has paid in fines for doing the exact same thing.

It is very volatile and speculative, I personally find it fun.

If you want to hold bonds or very low risk funds, then go ahead. If you want to throw £500 at some super risky altcoin then do that too. We all know to max out our ISAs, invest in sensible baskets of stocks that return 10-12% per year and over decades we can retire comfortably - but

A lot of young people today don’t have that choice and they are looking for alternatives. If there is some great reset coming in whatever form, crypto MAY be a way to front run it.

Your comment on young people is interesting.  The feeling of a lack of choice. Why can't a young person invest in sensible stocks for 30/40 years and then retire?

MeteredOut

Cus said:

Scottex99 said:

boingy said:

Comparing Bitcoin with shares is not a sensible approach.
You should compare Bitcoin with other, more traditional, currencies. People invest in Dollars, Pounds and Euros. Just like Bitcoin, none of those things are real.

Anyhow, I'm just glad to get my Bitcoin money back. Too volatile for my liking.

I don't know why crypto triggers such strong responses in people. 

Good for you, everyone is here to try to make money from their investments.

It creates such strong responses because it’s nascent, the White Paper for Bitcoin is 15 years old.

Typically older people don’t trust it as they can’t understand it and younger people see it as a type of digital gold: store of value, democratised hardest form of money that cannot be inflated away like fiat money can (and has).

We all know big bankers can’t be trusted to look after the average person, the same as the majority of politicians. Jamie Dimon just came out this week saying he hates Bitcoin and no doubt gave some Terrorist Financing, Money Laundering reason for it, ironic given what his bank has paid in fines for doing the exact same thing.

It is very volatile and speculative, I personally find it fun.

If you want to hold bonds or very low risk funds, then go ahead. If you want to throw £500 at some super risky altcoin then do that too. We all know to max out our ISAs, invest in sensible baskets of stocks that return 10-12% per year and over decades we can retire comfortably - but

A lot of young people today don’t have that choice and they are looking for alternatives. If there is some great reset coming in whatever form, crypto MAY be a way to front run it.

Your comment on young people is interesting.  The feeling of a lack of choice. Why can't a young person invest in sensible stocks for 30/40 years and then retire?

Because no-one on TikTok makes money from telling them to do so.

The reference to "the great reset" says a lot.

But perhaps I'm cynical

RichTips

Aegis said:

Scottex99 said:

Aegis said:

Scottex99 said:

How is that different to gold or stocks, aside from dividends and “gold can be used to make watches”

I don’t think it’s zero sum at all. 

I’ve bought at every possible price between $3k and $60k.

I bought at ~$17k in Jan this year when whoever was on the other side was happy to sell to me.

And I’ll sell sometime next year, hopefully in the $60-80k range. When someone will happily buy too.

its a free market, nobody that got in super early needs to convince people to push the price up, the market, hard money and economics does that job well enough 

If that was a serious question, you really aren't an informed investor.  Stocks are fractional ownerships of companies, which means that in the event that the shares are wound up, the shareholders are entitled to a proportion of the company's underlying assets.  At the same time, the ownership also gives access to a proportion of the profit that the company makes, whether distributed as a dividend or reinvested into the company for future growth. Doesn't matter which of those happens, the idea is the same: the company's activity brings in funds from external sources in exchange for the goods or services that the company provides.  As such, if the company has a good business model or good potential, that's the reason to expect the value of the company to go up.

That's not even remotely comparable to what happens with commodities like gold.  In the case of gold, someone buys it and it does nothing.  The hope is that the scarcity coupled with the utility (it's pretty and it's also a very good conductor) means that someone will eventually want to pay more for your gold than you bought it for.

With bitcoin, you have a system set up like commodities, but missing the utility. On its own, scarcity really doesn't matter, and eventually people will realise that. Based on what I am seeing in terms of the number of people who are getting more aware of what crypto is and how many scams there are in the sector, I'd be really surprised if you achieved $60-80k next year.  But hey, it's all based on completely irrational sentiment, so who knows?

You're right, the majority of my experience is with crypto and not with S&S, although I'm still old enough to have some Funds on HL etc.

But that doesn't make it zero-sum, except that the potential utility is more conceptual and is going to be for a while when the whole asset class is barely 15 years old.

Scarcity will matter if central banks keep printing billions in a never ending cycle of debt and inflation. 

And scams I would say are irrelevant, like there isn't scams in banking or even in huge global companies. Enron etc. Scams are prevalent because it's new and people are fairly clueless. I opened my junk mail personal email yesterday and had multiple Nigerian Prince, Lottery wins etc. Nobody would fall for that these days but they might just fall for some investment scam promising 2% return a week for "Forex Bitcoin Super Algo Trading" because people might think hmmm BTC did go from $1 to $50k.....

Unless you can identify how it is positive sum, it's zero sum. That's just how maths works - essentially it's stating that the only money coming into the system is what people pay in to buy the assets. In terms of utility, the idea of saying "well, it might do something useful in future" just means that it isn't doing anything now, therefore it has no utility now. Even with the best will in the world, there's no way to imagine that a bitcoin will actually be useful for something in future because the functionality would need to be there now.

As such, that leaves wishful thinking and the scams, and explaining why the scams are prevalent doesn't make them go away or give any additional protection.  As a comparison, I had an ISA with Kaupthing Edge back in 2008.  Kaupthing went bust and took my money with it.  I was protected by the Financial Services Compensation Scheme in full because it was a recognised bank and I had no reasonable way of predicting in advance that the bank itself would go bust.  The recognition here was that banks and investment platforms are an integral foundation of a functioning financial services industry, and it is really telling that the same protection has not been extended to crypto exchanges.

Honestly, keep trading bitcoin if it makes you happy, just stay very aware of the fact that by any long-term definition, it's not an investment.

I'll have a crack at demonstrating some kind of utility by way of a reductionist example, which I hope you'll entertain and acknowledge as such:

Imagine the Bitcoin network only ever consisted of two people. The creator and a solitary buyer. The creator lives in the USA, while the solitary buyer lives in the UK. Shortly after creating the network in, let's say, December of 2009, the creator agrees to sell 10 Bitcoin to this solitary buyer in the UK. He asks for $100 in total. The buyer digs out £64, converts it into USD and pays the creator $100 for the 10 Bitcoin. Everyone is happy.

Now fast forward to today. The creator remembers that Bitcoin thing he created years ago and suddenly develops nostalgia-fueld sellers remorse. He asks if he can have the 10 Bitcoin back. He offers to return the $100. Afterall, he never actually got around to spending it anyway. The buyer agrees, and accepts ten crisp ten-dollar bills. The buyer then takes this $100 to his bank, where he is pleasantly surprised to discover it is now worth £80. He is happy to have had this positive experience of avoiding the devaluation of his fiat currency relative to some other fiat currency. The creator is happy because he got his 10 Bitcoin back.

One could scale this example up and add further details (such as the technical explanation behind the fixity of the supply relative to the two units of currency mentioned), but it might get a bit long winded.